Godrej Consumer buys Indonesian co for Rs 1,200 cr

Rs 600-cr Megasari makes household items.

Business Line, Our Bureau, Mumbai, April 6

Godrej Consumer Products (GCPL) has acquired Indonesia-based PT. Megasari Makmur Group for an estimated Rs 1,200 crore, its biggest buy so far. HSBC was the advisor to the transaction.

The Rs 600-crore Megasari group is a manufacturer and distributor of household products which include household insecticides, wet tissues and air fresheners. It is less than 15 years old and has plants in West Java.

Megasari is also the second largest player in the household insecticide market in Indonesia having a 35-per-cent share in the category with brands such as the Rs 250-crore Hit (household insecticide) followed by smaller brands Stella (air fresheners) and Mitu (babycare).

Interestingly, one of Godrej's own insecticide brands is called Hit.

Mr A. Mahendran, Director, FMCG Portfolio Cell for the Godrej Group, told Business Line, “The funding for the acquisition has been done through a mix of debt and internal accruals.”

Biggest deal

This is the biggest deal for the group so far and also makes it the third largest acquisition by an Indian company after the Tetley and Glaceau buyouts made by the Tata Group. For GCPL, this is the fifth acquisition. It recently bought the Nigerian personal-care company Tura, two hair care brands in South Africa, and the UK-based Keyline brands. More buys are in offing with the group keen on building a global presence.

In fact, according to analysts, mid-sized Indian FMCG companies are well positioned to go in for similar acquisitions especially when the rest of the world is still recovering from the 2009 global crisis.

Mr Mahendran said, “We will be taking our own products and leveraging the distribution strengths to emerge the leader in Asia's household insecticide business. We are already the leaders in the category in India, but are No 3 globally in this category after SC Johnson and Reckitt Benckiser.”

A cross-functional team comprising Godrej and Megasari employees will be headed by Mr Naveen Gupta, who will help integrate the operations of the two companies.

Mr. Adi Godrej, Chairman, GCPL, said: “Megasari Group provides us a strong platform to establish a significant foothold in Indonesia, which is among the largest consumer markets in Asia. As an emerging market multinational, this acquisition is an important step in our global 3 by 3 strategy, that is, presence in three continents — Asia, Africa and Latin America — through three core categories — home care, personal wash and hair care.”

GCPL has a 49 per cent stake in Godrej Sara Lee and is in the process of buying out the balance in the company. It is also acquiring the global assets of Sara Lee's household insecticide business.

GCPL has already got shareholder approval to raise up to Rs 3,000 crore through a combination of debt and equity which would be used for international acquisitions as well as to buy out Sara Lee.

The GCPL scrip was up 2.19 per cent on Tuesday and closed at Rs 277.60

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Indian Group Snaps Up Indonesian Insecticide Maker Megasari